A CPA firm is considered independent when it performs whi

A CPA firm is considered independent when it performs which of the following services for a publicly traded audit client? A. tax return preparation as approved by the board of directors B. basic accounting recordkeeping and financial statement preparation C. accounting information system design and implementation D. both B and C E. none of the above Question 2 Which of the following is not an aspect of Rule 201 of the General Standards of the Code of Professional Conduct? A. A member must not take on an engagement that is beyond the member’s professional competence. B. A member must exercise duties prudently and professionally. C. A member must adequately plan and supervise the performance of professional services. D. A member firm must not advertise services to competing clients. Question 3 A member of the AICPA must safeguard the confidentiality of client information. Auditors however must disclose information to non-clients for the following reasons except to: A. discuss information relating to inadequate disclosure in an audit report. B. comply with a validly issued and enforceable subpoena or summons. C. accommodate the review of client audit workpapers under AICPA PCAOB or State Board of Accountancy authority. D. explain to members of the press the financial viability of a client Question 4 Which one of the following is an example of a conflict of interest for a CPA? A. performing tax services and a compilation engagement for a client B. serving as legal counsel and an auditor for a client C. providing an audit on internal financial controls and financial statements for a client D. being employed as a chief financial officer while serving as a member of the board of directors for the same company Question 5 Which of the following represents a situation in which the auditors may disclose client information to outside parties? A. Bringing working papers to a professional CPA workshop as an example of quality work. B. Complying with a validly issued and enforceable subpoena or summons. C. Showing the client’s bank statement to a neighbor who is a shareholder to emphasize its cash position. D. Explaining to the local television news station why the client is likely to miss payroll in the forthcoming periods. Question 6 Rule 201 dealing with General Standards that are applicable to all CPAs no matter the type of services that are rendered does not include which factor? A. Due professional care. B. Integrity and objectivity. C. Planning and supervision. D. Sufficient relevant data. B. Integrity and objectivity Question 7 In determining the types of activities engagements and interactions an auditor should have with a client the CPA and the audit firm must do which of the following? A. only assess the relationships of clients that pay audit fees that are material to their firm. B. assess all of their relationships with every client to ensure that independence is intact. C. focus on client satisfaction above all other considerations. D. realize that ethics are only guidelines and a matter of personal judgment. Question 8 Independence is not required for which of the following types of services? A. Audits. B. Reviews. C. Consulting. D. Attestation. Question 9 Which of the following suggests a weakness in the internal control environment? A. the firm has an up-to-date organizational chart B. monthly reports comparing actual performance to budget are distributed to managers C. performance evaluations are prepared every three years D. the audit committee meets quarterly with the external auditors 0 The importance to the accounting profession of the Sarbanes-Oxely Act is that A. bribery will be eliminated B. management will not override the companys internal controls C. management are required to certify their internal control system D. firms will not be exposed to lawsuits 1 Control activities under SAS 109/COSO include A. IT Controls preventative controls and Corrective controls B. physical controls preventative controls and corrective controls. C. general controls application controls and physical controls. D. transaction authorizations segregation of duties and risk assessment 2 Control risk is A. the probability that the auditor will render an unqualified opinion on financial statements that are materially misstated B. associated with the unique characteristics of the business or industry of the client C. the likelihood that the control structure is flawed because controls are either absent or inadequate to prevent or detect errors in the accounts D. the risk that auditors are willing to take that errors not detected or prevented by the control structure will also not be detected by the auditor 3 Which of the following is a preventive control? A. credit check before approving a sale on account B. bank reconciliation C. physical inventory count D. comparing the accounts receivable subsidiary ledger to the control account 4 The fundamental difference between internal and external auditing is that A. internal auditors represent the interests of the organization and external auditors represent outsiders B. internal auditors perform IT audits and external auditors perform financial statement audits C. internal auditors focus on financial statement audits and external auditors focus on operational audits and financial statement audits D. external auditors assist internal auditors but internal auditors cannot assist external auditors 5 The office manager forgot to record in the accounting records the daily bank deposit. Which control procedure would most likely prevent or detect this error? A. segregation of duties B. independent verification C. accounting records D. supervision 6 Tests of controls include A. confirming accounts receivable B. counting inventory C. completing questionnaires D. counting cash 7 An accounting system that maintains an adequate audit trail is implementing which internal control procedure? A. access controls B. segregation of functions C. independent verification D. accounting records 8 Music Inc. a domestic corporation owns 100% of Vinyl Ltd. a foreign corporation and Digital Inc. a domestic corporation. Music also owns 12% of Record Inc. a domestic corporation. Music receives no distributions from any of these corporations. Which of these entities’ net income are included in Music’s income statement for current year financial reporting purposes? A. Music Vinyl Digital and Record. B. Music Vinyl and Digital. C. Music Vinyl and Record. D. Music Digital and Record. E. None of the above 9 Which of the following taxes are included in the total income tax expense of a corporation reported on its Federal tax return? A. State income taxes B. Federal income taxes C. Foreign income taxes D. Local income taxes E. All the above Question 20 Which of the following represent temporary book-tax differences? A. Compensation-related expenses C. Municipal bond interest C. Meals and entertainment expense deduction D. Nondeductible penalties E. All the above Question 21 Which of the following items are not included in the income tax note for a publicly traded company? A. Breakdown income between foreign and domestic B. Analysis of deferred tax assets and liabilities C. Breakdown of income among States D. Rate recognition E. Analysis of total tax expense components Question 22 How are deferred tax liabilities and assets categorized on the balance sheet? A. Capital and ordinary B. Domestic and foreign C. Current and non-current D. Positive and negative E. None of the above Question 23 Larson Inc. hopes to report a total book tax expense of $160000 in the current year. This $160000 expense consists of $240000 in current tax expense and an $80000 tax benefit related to the expected future use of an NOL by Larson. If the auditors determine that a valuation allowance of $30000 must be placed against Larson’s deferred tax assets what is Larson’s total book tax expense? A. $160000 B. $130000 C. $190000 D. $240000 Question 24 Hot Inc.’s primary competitor is Cold Inc. When comparing relative deferred tax asset and liability accounts with Cold which of the following should Hot do? A. Scale the deferred tax assets and liabilities by total sales or total assets B. Compare raw dollars amount of deferred tax assets and liabilities C. Ignore deferred tax assets and liabilities and focus on overall effective tax rate. D. Ignore all tax information other than the current tax expense E. None of the above Question 25 Paint Inc. a domestic corporation owns 100% of Blue Ltd. a foreign corporation and Yellow Inc. a domestic corporation. Paint also owns 40% of Green Inc. a domestic corporation. Paint receives no distributions from any of these corporations. Which of these entities’ net income are included in Paint’s income statement for current year financial reporting purposes? A. Paint Blue Yellow and Green B. Paint Blue and Yellow C. Paint Blue and Green D. Paint Yellow and Green E. None of the above

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